2022 End Of Year Wrap Up

Exhausted. This has been another year of tons of activity for us.  I think I’m biting off more than I can chew and in 2023 I need to step back and say “No!” to more of my ideas that take significant time and energy.  Here’s a breakdown of our 2022 accomplishments:

Apartment Building:

We purchased a 6 unit apartment building in late February of this year. This property has defined much of this year for us. The property was far below market rent, and although the pro-forma showed it made a profit, after included debt service on 70% of the purchase price, it would barely cash flow itself. The pro forma also didn’t include any insurance, which is currently costing us $286 per month for the building.  Apartments with utilities included were rented out as low as $350 a month.  That math doesn’t math.

We have done a full rehab on 4 of the 6 units in this building and turned 3 of them into short term rentals.  We upgraded the heating system and water heater, added a guest laundry area on the enclosed front porch, and are in the process of building an arcade for guests in the 2 car garage.  We paid $171,000 for the property and so far have put around $50,000 into it.  We have about $2,000 left to spend to complete the arcade and the rehab on the final unit.

For this year from operations the building has netted us around $10,000.  For most of the summer we only had 2 units available to rent.  For 2023 with 4 units available in the summer and 2 long term rentals I expect the property to cash flow us at least $36,000, that’s in addition to principal paydown of around $6,000.

On an additional note, the Airbnb rating system is trash.  The scale is a 1 to 5 scale, which traditionally 1 would be terrible, 5 would be great, and 3 would be average.  Average would mean it was an OK stay and everything was satisfactory.  This is not how Airbnb ratings work.  With a rating of 4.6 Airbnb delisted one of my units for a week. As a guest if you rate someone as a 4 it is telling Airbnb you want them kicked off the platform.  This is not how a 5 star rating system should work.  I’ve had several 4 star reviews with nothing but positive comments.

Airbnb also gives a star rating for the guests to evaluate based on location.  This to me seems unfair, as the location is chosen by the guest. They can see the location prior to booking.

After having probably over 100 guests total we got our first true guest from hell.  This guest booked our small studio apartment that is around 200 square feet total for a week.  First this guest tried to book outside of Airbnb for 2 months and we declined, then they autobooked for a week. On the first night they sent a message (several hours after check in) about a small stain on the floor and that they needed to clean it up.  We apologized and offered to refund their cleaning fee and refund their full amount if they wanted to stay elsewhere.  They declined.  We then found out that they had brought a uhaul to our property and parked it in the grass.  When we sent a message about this letting them know that it was against local ordinance to be parked on the grass and they needed to move it, they were very hostile towards us.  Again we had to message them for multiple noise complaints between 11PM and 4AM  and once again they were hostile.  On night 6 of their 7 night stay the guest claimed she got Covid from our unit and was leaving and wanted a refund for her final 2 nights (this was 11PM on night 6 of 7).  Airbnb physically would not let us approve her change request because she was asking for a refund for the night that was already 12 hours after checkout.

We then find out from the room condition and from other guests that they brought multiple dogs with them to this unit, despite not putting them on the reservation.  They leave us a 1 star review, complain to Airbnb, and we are forced to refund them half their stay.  Our very next guest gave us a stellar 5 star review.  This is another reason why the review system is fucked up.  It gives assholes an inordinate amount of power.  How many 5 star reviews do you think it takes to recover from a 1 star review?  The answer is 19.  It takes 19 5 star reviews to offset to a 4.8 average from a 1 star review.

OK rant on that over.

This is a overall 2 new business models for us and we have been learning a lot.  Multifamily is new for us and short term rentals are new for us.

On the financing side we currently have $115,000 of debt financed at 4.75% on a commercial 15 year mortgage.  This mortgage balloons at 5 years, at which point we will still owe $88,000 on the mortgage. My plan is to start the process of a refinance a year early, at which point we will be able to recapture the equity we have put into the house.  I don’t want to refinance right now with mortgage rates where they are right now.  If our 2023 income projections are correct, this property should appraise at around $300,000, allowing for a  $210,000 new mortgage in 2026. Our current payment of $931 per month is roughly $457 on interest and $473 on principal.

We have financed the down payment and our rehab on our Home Equity Line of Credit, which has $100,000 on it for this property at 6.5% interest.  For the first half of the year this was only at 3%.  This is an interest only loan.  This payment is currently $541 per month.


Rental #10

I bought this rental property in August / September thinking once my outage season wrapped up I would tackle it.  That did not happen. In 2022 I worked on this house for one day.  During the outage I had 2 houses come back to me, 1 of which my tenant had destroyed and it required a full rehab.  I finished that house right before Thanksgiving and I finished the second one in mid December.  Between Christmas, a back injury, and not being able to get heat turned on (and thus water) until January 9th, this property has been put on the back burner.

We purchased this property for $35,000.

The positives:

The Size: This is a massive house with a massive garage.  This house is currently set up as a 4 bedroom house, however it has the potential to be 6 bedrooms.  1 of these bedrooms is an unfinished space behind another bedroom that we will finish(Section 8 counts this configuration as a bedroom), and a bonus room on the main level that can easily be called a bedroom.  The attached garage is roughly 25′ X 40′ with 12′ ceilings.  Our primary goal is to provide rental houses with lots of bedrooms for large families, which is something that is highly lacking in our market.

The location: This house is as a crow flies only 2,500 feet from our apartment building and only 200 feet from another house we own.  This is a a decent neighborhood that has seen a lot of investment over the last few years and will continue to improve.

The clean up: The last 2 houses we bought had tons of stuff we had to get rid of and clean out.  This house is completely empty, which makes the rehab process much easier.

Recent Upgrades: The roof looks like it was replaced in the last 5 years and the exterior electrical was also recently replaced.

The Negatives:

The siding on this house is terrible and its highly unlikely I could patch it, even if I could find a siding match.  This siding looks like a faux wood siding made of thin layers of pressboard.  Replacing the siding will probably be the biggest ticket item as I would need to hire it out.

The ductwork: After purchasing the house I discovered there was no ductwork for the furnace going into the upstairs bedrooms.  This will be another costly challenge that I will need to hire out.

The well: This house has a well, which I am really not a fan of. Wells are great for self sufficiency, but not for landlords.  A well makes the property cheaper for the tenant by roughly $75 to $150 a month depending on water usage, but typically doesn’t change the rent amount much.  With city water it costs nothing to get turned on, but with a well, it would cost me $6,000 to replace.  This is a major overhead expense.  Beyond that, this particular well is a spike well.  This is a well that was drilled in the basement.  This means it is a much older well, and would likely not be repairable if it ran into issues.

Paint and flooring: I’m so sick of painting.  Every room in this house needs paint and most of the rooms need new flooring. The kitchen and dining room have tile which will stay and then we may tile the living room and do carpet / carpet squares for the rest.


The Book Business:

We started an Amazon book reselling business last year. The main goal of this business was to employ our minor children so that their earnings could fund their Roth IRAs at super young ages.  In 2021 we had an amazing start to this business, largely off of the Dr. Seuss banned books.  In March Dr. Seuss discontinued several books and I found a retail arbitrage situation where I could buy them on eBay and resell on Amazon making a huge profit.  For 2021 we had total revenue of around $27,000 with net income before wages of around $11,000.  Between the 3 kids they earned around $5,000 which went into their Roth IRAs.

For 2022 things slowed down quite a bit.  Mrs. C. and I have prioritized this apartment building, getting houses that came back to us rental ready, and of course my work schedule over book sales.  We also did not have the Dr. Seuss catalyst, so everything has been local thrift stores and local library sales.  We have done a little over $4,000 in revenue this year with wages to the kids of just over $2,500 and operated at a slight loss for the year.   For 2023 I want to get somewhere in between. I would like the 2 younger kids to be able to get at least $2,000 each into their Roth IRAs this year.


No new properties 2023:

I’m not going to swear by this, but my current plan is to not buy anything in 2023.  I don’t really want to put another property on our Heloc with interest rates as high as they are and as high as they should keep going. If we get another property I will need to get a direct loan for it, not following the BRRR strategy.  In this case we would be looking for either a house for an Airbnb or a commercial property.  I do not want to do another rehab anytime soon.  Rental house 10 and Unit 5 in the apartment building are more than enough for this year.


This was a dual home outage year for me working nuclear power plant outages.  In addition to this being a dual outage year this was also a rebuilding / restructuring year for us, which added a lot of work, stress, and thankfully money to the equation.  We had dropped down to a staff of 55 from our normal 150 during Covid due to a reduction in scope to minimize Covid transmission.  Ramping back up to 150 during the labor crunch was difficult and required a drastic increase in pay rates across the board.  In addition to this we also switched departments, which has been a positive move for our group and now our plant has an in house project manager whose primary focus is the ice condenser all year, not just during refueling outages.

In total I worked 32 weeks and 1,779 hours this year.  This should be a high watermark.  Both outages required more prep work than normal for me and both were longer than outages going forward will be.  2025 is our next dual outage year and I expect to work closer to 24 weeks during 2025.

Tesla Stock:

I’ve been a long time Tesla Bull. I first invested in Tesla in 2016 with a market cap of $30 Billion.  At its peak Tesla was trading at a valuation of around $1.1 Trillion, Now it’s back down to around $330 Billion.  Over the years I’ve added some here and there and those additions have greatly increased my average share price, which split adjusted is $42 a share.  I’m still up quite a bit, but damn this year has hurt.  My Tesla holdings are down over a quarter million dollars.  That is hard to stomach, but I am not selling.

When stock market moves like this happens you have to investigate the WHY.  In this case Tesla stock has not declined for business case reasons, it has declined because the CEO has lost popularity points and spent inordinate amounts of time and resources on Twitter.  Nothing internal to Tesla has gone bad, in fact this quarter a ton of positive things are happening at Tesla:

  • Megapack factory is live and cranking out Megapacks.  The new factory can produce 10,000 megapacks a year.  With megapacks starting at $1 million each, that’s $10 Billion in revenue!
  • Giga Berlin and Giga Texas have both achieved run rates of 3,000 vehicles a week and are continuing ramp.  Both factories are designed to be better, more efficient, and more productive than Giga Shanghai, which is currently producing at a run rate of 25,000 vehicles a week.
  • The first deliveries of the long awaited Tesla Semi have been delivered.
  • Giga Shanghai has cranked out record numbers, hitting over 100,000 vehicles the month of November.
  • Tesla is opening up the super chargers to other car manufacturers. This is a much bigger deal than most people are realizing.
  • Gross vehicle margins and net free cashflow have been growing every quarter with over $3 billion in free cash flow last quarter.
  • Future tech: There is considerable value to be built on FSD which keeps getting better and better and on the Teslabot.

There is also a false narrative that demand has fallen off a cliff because Tesla has more production than deliveries (439K production in Q4 vs. 405K deliveries.)  This delta of 34,000 vehicles is a lot.  First we need to examine how Tesla operates vs. other auto makers.  Other automakers essentially have a single number. They make the vehicles and they are instantly “sold” to dealerships, even if the cars then sit on lots for weeks.   For Tesla any vehicle produced must reach its end customer being signed and delivered to count as a delivery.

Tesla’s pace of production is increasing, and with Giga Shanghai shutting down for a bit over a week for the Chinese new year holiday, they likely ramped up production right at the end of the year.  If we look at this linearly, Tesla produced 4,877 vehicles per day over the last 90 days.  This makes the gap between production and deliveries approximately 7 days. Assuming production was higher towards the end of the quarter, this may represent closer to 6 days of production.  In addition to this being a relatively small lag time, especially considering that many units are being produced in China and shipped to Europe and Australia,  there are also major tax implications that could have resulted in end users choosing not to take delivery until the new year.  The last week between Christmas and New Years is notoriously busy for most people and taking delivery of a vehicle may not be at the top of the to do list.

6 or 7 days of production not being delivered yet does not show a collapse in demand, especially since Tesla spends $0 on advertising.  This is a massive lever that Tesla can pull if it feels organic demand is falling.  Ford spends the most of any car company at around $1,800 per vehicle spent on ads. Another lever for Tesla is pricing, which Tesla has just started cutting.  Tesla greatly increased the prices of all models over the last 2 years because demand greatly outstripped supply.  As production increases, it is only natural for Tesla to lower prices. Tesla is also working on migrating away from end of quarter pushes.  End of quarter pushes are probably the dumbest thing that Tesla does, but the stock market reaction to the delivery numbers is exactly why Tesla does it. The daily stock market moves of a public company are often erratic.   End of quarter pushes adds a lot of cost to pay people overtime and pay for express shipping to get vehicles delivered before midnight on the 1st, when the same vehicles would have sold just as well getting to their destination 2 days later.  It should be normal for an operation the size of Tesla to have 7 days from production to delivery on their vehicles.  10 days may even make sense.

What blows my mind is that everyone is concentrating on deliveries, which yes, deliveries is what produces revenue on paper in the quarter, but production is vastly more important and more difficult to do.  Production increasing to 439K from 365K quarter to quarter is amazing.

I would like to see Tesla start a stock buyback program this quarter. Buying at a valuation of <$330 Billion is a smart move given the $20 Billion cash Tesla has and $3 Billion+ per quarter in free cash flow.

I’m still long on Tesla and expect Tesla to have a 2025 valuation well north of 2 trillion.  So why am I not buying more right now?  This is a great time to buy Tesla stock, but because my exposure is still a very significant portion of my total net worth I am not increasing my balance. With the drop on January 3rd I am considering putting a few thousand more onto Tesla.


Kid #1:

Kid #1 graduated high school this year and upon graduation went from part time to full time at his retail job.  He has continued to put 50% of gross pay into his Roth 401K and has been storing up cash in his bank accounts for a car purchase and emergency fund.  Getting his license is a major priority for this year.  If he stays the course with his current savings rate by the end of the year he will be in a fantastic position.  He will be 20 years old with more money invested in his retirement accounts than I had at 29.

Kid #2:

Kid #2 has started a home school program for this school year and should be able to graduate a couple years early with a work at your own pace schedule.  He also got his first job working at a fast food restaurant.  Finding any place that hires 14 year olds is difficult.  Currently he is being scheduled for 3.5 hour shifts. The main benefit to having a real job now is being able to contribute to a Roth IRA.  With more hours from a real job some of his tasks in our book business can go to kids 3 and 4 to maximize Roth contributions.  For 2022 total contributions between the 3 kids in the book business hit $3,000.  Kid #2 is scheduled to start drivers end this summer.  He passed the swimmers test in Boy Scouts, allowing him to get to first class. With the amount of merit badges he already has getting to Star and Life rank and pretty much in the bag.  He should have no problem getting to Eagle rank.

Kid #3:

Kid #3 has slowly built the coolest home office in his bedroom for video game playing.  He is doing well in school and still active in cub scouts, he will move up to boy scouts this year.  Kid #3 is my chill child.  His little brother is another story. For 2023 I plan to get Kid #3 more involved in the book selling business. With Kid #2 having a job outside the home, I would like for Kid #3 to pick up a lot of the work in this business.  The main goal is to funnel money into his and Kid #4s Roth IRAs.


Kid #4

Kid #4 is the wild child.  He loves football and is very active.  From the time he wakes up in the morning to the time he goes to bed he is bouncing off the walls.  Trying to find positive outlets for his energy is a challenge.  He doesn’t have as much ambition as the other kids for making money at this stage.  He is starting to realize that the other kids have more stuff, video games, etc than him and is starting to relate that to lack of him working.  The first stage is working because money buys stuff, then I need to sell him on money buys time in the future.



2023 will be a key year for us.  This will be the first year since I started working nuclear plant outages in 2006 where I will take a season off.  I do not plan on travelling for work in the spring outage season and there is no planned outage at my home plant this season.  This extended lack of W2 income will result in less spending, drawing down our cash position,  as well as me starting to take a draw from rental activities.  For the four years we have been in the rental business I have not taken any money out, in fact I have paid the heloc out of my personal account instead of the business account this whole time.  Mrs. C. takes a $1,000 draw per month that offsets her quitting her job and pays her for property management.  I plan to start taking $2,000 per month out of our rental account starting in March.  This will lessen our cash draw down and still leave significant positive cash flow inside the business to pay down our Heloc.  I should be going back to work in mid August.

We will continue to iterate on our 6 unit apartment building, making it more comfortable and desirable for guests, while also decreasing our turnaround time on vacancies.  We just had 2 houses that took 3 to 4 months to get rented back out.  We had a house come back on January 1st which will have a signed lease by January 10th.  That’s the type of turnaround we want!

At the end of the year we should have a good sight on our oldest moving out and going out on his own.  I think he will be out of the house before the end of 2024. By the end of 2024 he will be 21, have a paid for car, a significant emergency fund, will hopefully be purchasing his own home, and will be nearing the magic $64,000 mark in his investment accounts. He should also get his license this year.  Kid #2 should be able to get close to maxing his Roth IRA for 2023 and we have a goal to get $2,000 into Kid 3 and 4s Roth IRAs.  Kid #2 will start drivers ed this year and we hope to have a smoother process with getting him a license.

I’m going to visit my Sister’s family in California this month. This will be my first time going out there.  I typically am seeing my sister about every other year ish, maybe a little less and this is something I need to work on improving.  We are also planning a family trip together for the summer where her and kids will fly into Columbus and we will meet them there, spend a day or two at the Columbus Zoo, then go to Southern Ohio to visit with our parents and grandmother.

There are no plans for a Florida trip this year. We may do a six flags or cedar point trip, which is much more cost effective.


How has your 2022 gone? What are your goals for 2023?

John C. started Action Economics in 2013 as a way to gain more knowledge on personal financial planning and to share that knowledge with others. Action Economics focuses on paying off the house, reducing taxes, and building wealth. John is the author of the book For My Children's Children: A Practical Guide For Building Generational Wealth.

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